Tuesday, January 8, 2013

IMPLEMENTING SAAS - A CASE STUDY

IMPLEMENTING SAAS - A CASE STUDY

But things weren’t always this good. When Subhasish Saha, CTO, Apeejay Group, joined in April 2008, the bookstore’s IT infrastructure suffered from serious challenges. “There were significant inefficiencies with the point of sale function. And since the inventory management system was not integrated with the POS system, we lacked control over our inventory,” he says.

Business case:

That’s something the Oxford Bookstore's head of finance and accounts, Anindya Subhro Biswas, has seen the bookstore battle for a long time. “Traditionally, the book retailing business has been prone to excess purchases, an over-stocking of SKUs, and a pile-up of non-moving or slow-moving inventory.” It’s a problem that all Indian book retailers without IT systems face, given that India produces over 80,000 new titles a year.

Oxford, for example, adds about 50,000 new titles a year to the 2 lakh it already maintains. What made it harder for Oxford was its decentralized approach. This allowed a single title to have multiple codes across each of Oxford’s 25-plus stores, making it almost impossible to get a fix on the number of copies it had of a popular title like, say, Shantaram. Inevitably, this led to high inventories. “With a dispersed retail operation and increased volume of transactions, the challenge was to find a way to regulate processes and manage transactions,” says Biswas. And with over 150 additional SKUs a day, Oxford’s problem wasn’t getting smaller. Despite these challenges, Saha’s bosses in Kolkata gave him a tall order. “We wanted to encash on an early-mover advantage by rapidly expanding our retail operation, both in India and abroad,” says Biswas. “The vision was to operate over 100 bookstores by 2010, the eve of centenary of the Apeejay Surrendra Group.”

Project:

If the iconic bookstore was going to meet that target, it needed visibility along its entire supply chain, from its supplier to down to its stores — the sort of visibility that an ERP system could provide. The problem was that an SME like the Rs 25-crore Oxford Bookstore didn’t have the deep pockets an ERP implementation called for. It’s a growing problem for India with SMEs upping their contribution to the country’s GDP from 17 percent to 22 percent by 2012, according to Assocham.

“Management was looking for a model that would allow Oxford Bookstore to leverage its full IT potential without large one-time IT capital investments or issues of scalability,” says Saha. Theoretically, that’s exactly what a SaaS model offers. And although some solution providers have tested it with industries like apparel, admittedly, the idea remains unconventional in India — and it had almost never been tried in Indian retail before.

Challenges:

Also, few providers offered the complete set of services Saha wanted and there was no guarantee that once a deal had been inked Saha’s small account wouldn’t get jostled aside by larger ones. At the same time, Oxford’s management was apprehensive about using a SaaS model because it had heard about security challenges, and had fears about vendor lock-in.

Most of these issues could be dealt with, if Saha could find the right vendor and more research and relationship later, he did. “We decided on a vendor only after we were sure they would not just be an implementer but a fully-involved business partner,” says Saha. “Now, we have one of the very few full-cycle implementations of SAP IS retail delivered via a SaaS model and we’re a first-of-its-kind in the book retail industry.”

Benefits:

Today, the ERP-SaaS project has centralized all Oxford titles across all branches into a single directory controlled by an ERP. Data from here flows to all modules including a store inventory module and the bookstore’s points of sale. It also covers the company’s payroll and accounting needs, and Web tools, says Saha. The results of the Rs 1.08-crore ERP-SaaS project (which is to be paid in monthly installments over five years) is the best gift Oxford could have asked for. Revenues have catapulted a full 20 percent adding a whopping Rs 3.4 crore to the bookstore’s coffers.

The ERP-SaaS project also helped increase footfalls into Oxford’s bookstores by 25 percent and swell bill sizes by 20 percent. Profits have been spectacular on the e-platform too. Online sales have jumped a full 100 percent and revenues have escalated by 50 percent. It’s also made other aspects of running a retail business easier, including managing a CRM, a loyalty program and discount schemes. “We have optimized our merchandising mix, reduced the carrying cost of inventory, and increased our monitoring on non-moving and slowmoving inventory. Also we have managed to regulate discounts and credit limits,” says Biswas. Saha estimates that Oxford will recover the cost of the ERP-SaaS implementation in four years.